Discuss the difference between wagering agreements and insurance contract
Answers
1. Enforceable
A contract of insurance is legally enforceable, a wager is not.
2. Insurable Interest
There must be insurable interest in the subject matter under a contract of insurance. This is not necessary for a wager, where the interest is limited usually to the stake won or lost.
3. Utmost good faith
A contract of insurance requires the parties to observe utmost good faith but in case of a wagering contract, good faith need not be observed.
4. Premium
In case of a wagering contract, no consideration by way of premium is given by the insured to the insurer, whereas in the case of an insurance contract, there is consideration due to the presence of insurable interest.
5. Social Approval
Insurance contracts have the general approval of the society and are encouraged as they benefit the community as a whole, while wagering contracts are not approved by the society.
6. Indemnity
Indemnity and nothing more than indemnity is obtained under a policy of insurance other than life or persona accident; this does not enter into a wager. The sum paid under a contract of insurance represents the actual loss sustained; he who wins a bet has his stake returned, together with some addition.
7. Happening of Event
An insured event (except death) against the risk of which the insurance is taken may or may not take place at all. The wagering event is bound to happen.